Peninsula Energy Ltd (ASX:PEN) has entered into agreements with major shareholders Resource Capital Fund VI L.P. and Pala Investments Ltd to increase the Total funding from US$15 million to US$20 million under the existing convertible loans.
Peninsula said that the final binding agreement nearing completion on US$25 million revenue streaming facility.
Peninsula is producing uranium from the Lance Projects which have a mine life of at least 20 years, underpinned by 53.7 million pounds, the largest uranium ISR JORC-Code compliant resource in North America.
Uranium extraction from wellfields at the Lance Projects for the quarter ended 30 September 2016 was 54,000 pounds of uranium, an increase of 25,000 pounds of uranium over the quarter ended 30 June 2016.
Each header house experiences slightly different rates of ramp-up and Peninsula said that it is currently seeing header houses 3 and 4 taking longer to ramp-up than originally projected.
The additional funding will be used for the commissioning of the remaining Stage 1 header houses 5 to 7 as well as allowing the Company to progress Stage 2 development preparations.
Gus Simpson, managing director, commented:
"Peninsula is pleased to have secured this additional funding from our major shareholders and hopes to conclude the revenue streaming deal in the near future, which will enable the company to accelerate development activity at the Lance Projects and move to the next production phase."
Use of funds
Total proceeds from the convertible loans will be mainly used for general well field development activities at the Lance Projects, resource development drilling, final stage 2 engineering design, and for general working capital purposes.
The completed Stage 2 expansion is expected to reduce projected all-in sustaining cash costs by US$9-10 a pound.
Broker spotlight
Last month London based Numis Securities Limited initiated coverage on Peninsula.
The broker noted: "We initiate coverage with a target price of A$1.20 based on 1x our 7% NAV for Lance and 0.5x our 10% NAV for Karoo."
Peninsula last traded at $0.54 per share.